Importance of Petrojam terms of reference

The recent costing of Petrojam, which is now up for discussion in the House, demonstrates why the terms of reference for the refinery’s forensic audit are so important.

Minister Fayval Williams has suggested in Parliament that Petrojam’s value has plummeted from US$128 million in 2006 to US$34 million in 2018. This was based on an evaluation conducted by the same firm that conducted the valuation exercise in 2006.

However, according to the prime minister, the terms of reference used to determine the 2018 valuation were changed, and when compared to a 2017 valuation produced by the opposition member of parliament, Peter Bunting, the reported Petrojam costing amounted to US$170 million. Once again, with the same firm doing the valuation.

Apparently, the only thing that changed were the terms of reference given to the valuating firm. We do not know if the 2016 valuation included the vacuum distillation unit (VDU), as did the 2017 report. The 2018 valuation apparently does not include the VDU, which means a significantly lower costing for the refinery’s operations, and not a ‘run-down’, as the Government suggested.

As such, the country was asked by the Government to compare apples to oranges.

If the refinery is allowed to set its own terms of reference for the forensic audit, how can we not expect a similar outcome as the valuation exercise?